Why Underestimating Effort and Resources Needed Causes Consistent Business Failure

So you want to be an entrepreneur. Maybe you have some money saved up and a job and you want some extra income via a business. Or you want to start a business from the ground up as your main career. Here are some truths for you.

There are many varying statistics but most point to the fact that 90% of startup businesses fail by the 5th year of existence. The data is a little more positive in shorter time frames. For instance, 50% of startup businesses will fail by the end of 1st year since they are formed. I am not going to sugarcoat this, but chances are if you start a business, you are more likely to fail than succeed. That is a guarantee.

When asked why their businesses failed, most entrepreneurs mentioned running out of money, wrong market (customer or conditions), not doing enough research, having bad partners, poor marketing and lack of expertise in the particular business as causes of failure. While each of these are important on their own, they can be summed up as lack of resources and lack of proper efforts.

You see, when most people start a business, they have this exceptional optimism of a successful future by trusting in their execution plans completely. They don't factor in problems along the way as much as they should. They are more inclined in calculating potential profits and just initial set up costs. This is why at the point they are faced with adversity, they freeze and give up or start losing interest in the business slowly until their business dies completely.

Some go an extra mile, by having business plans, budget setups and even some market research done. However, the reality of most businesses isn't what we see on business plans. Over time, a business will have to change to keep growing, as long as your priority is continued growth. These changes are usually painful to the entrepreneur as they will involve learning new and usually complex things and sometimes let go of deep beliefs they had before about running a business 'their way'.

New entrepreneurs don't know this because one has to experience it to learn it fully. After spending 6 months trying to sell Tshirts on Teespring to the US market and selling only 1 tshirt after spending so much time on design and money in marketing, I tasted some of this lesson. I learned even more because right after that I tried drop-shipping tech products to Tanzania and earned zero for months of work. Both of these are lesson on proper effort and resources because with more resources I could have outsourced design and strategy for the Tshirt business and on proper effort maybe I could have spent more energy testing marketing methods for the drop-shipping business and execute with maximum effort on those showing promise. Results could have been different, but again since failure is more probable, maybe not. What is certain thou, I would have had more shots to get things right and that is crucial.

This concept of more effort and more resources is even more important when your business has shown success. At this point, most people will start taking the foot off the accelerator and relax. Yes, enjoy your success but remember that your business doesn't exist in a vacuum. You have competitors and the market is continuously changing. If you don't improve, well, I am pretty sure you can mention a few formerly successful companies that acted the same and are now gone. That is the future for your business.

To sum all this up, if you are a new entrepreneur, I want you to know its going to take more effort and resources to achieve success than you think. Probably much more. Be prepared mentally by looking out for worst case scenarios as well as best case scenarios for everything that you are doing. Be prepared physically by being ready to work more than you ever did because it will likely happen. Prepare resources ahead of time be it money, knowledge, research and access to proper partners/mentors/consultants. Account for failure in preparation of monetary resources as well. My rule of thumb is if the business plan says you need 10 dollars, prepare at least 30 dollars. 10 dollars to lose most of, another 10 dollars to lose little of and the final 10 dollars to break even on. Note there is no profit yet since that will come after reinvesting the last 10 dollars and the rest of the money if you didn't lose all of it.

I am gonna end this article with some more truth. Even thou you are likely going to fail, being an entrepreneur is the fastest way to grow in every aspect of life. Its going to be boring, exciting, new, repeating, hard, easy, lossful and rewarding. Whatever you are feeling when you read those words, expect to feel so much more in your journey. You probably won't enjoy the journey that much, but you will be excited. You will keep going so that when you reach your goals, you will feel it was all worth it. Godspeed, fellow hustler.